Business Strategy - Corporate Choices of Honda - Essay Example

? Business Strategy Corporate Choices of Honda Corporate strategy is regarded as the direction which an organization takes to achieve the objectives of the business. However, due to the uncertainties of business environment, it has become necessary for the companies to anticipate and adapt to the changes for operating and sustaining in the market place for a longer period of time (Hitt, Ireland and Hoskisson, 2010). As a result of that, companies nowadays formulate and pursue flexible strategies. The development of the corporate strategies takes into account the scope and purpose of the activities of the organization and also the nature of business. Apart from that the external factors such as business environment, the position of the company in the market place, and the intensity of competition it has to face are also considered while formulating the corporate strategy. In case of Honda, the strategies of the company, in order to ensure its long term presence and remain profitable are increasing investments, market expansion, new product development as well as integrating technology for operational purpose. As a result of this, the company was able to increase its productivity (Berger, 2011). These choices paid off for the company to a great extent and it fostered Honda to strengthen its distribution network. Although the strategy helped the company to diversify its product line and expand business, the overall sales dropped marginally (Ahlstrom and Bruton, 2009). The figure above makes it clear that the Honda witnessed reduces sales volume for its full size cars, minis and trucks and buses, even after making the new strategic choice. One of the positive outcomes of this strategic choice for the company was that, it allowed them to create value for the stakeholders. Honda: Success as a Corporate Organization A shift in the strategic choice for the company has allowed them to unearth new avenues and dimensions of business. The new strategic choice for the company also allowed them to diversify the product line and cater to overseas countries. However, the only negative outcome for pursuing this strategy is decreasing sales volume. The decreasing volume of sales was also becoming a cause of concern for the company and for that reason further investment in the field of research and development was not possible. Despite that Honda was able to position itself as a successful corporate citizen. With this approach, the company was able to make good market positions for them in the European as well in the US market. In the late 80s, the company succeeded to become the fourth largest car manufacturer in USA. One of the major drivers of success for the company was the decision of Honda to diversify product line into motor cycle, power equipments and automobiles. Moreover, this strategy also allowed the company to target different type of customers and allowed them to operate in both B2B (Business to Business) and B2C (Business to Consumer) channels. The dealers of the company were also enthusiastic about the same and they supported the company which allowed the company to strengthen their financial status. Hence from the above discussion, it is obvious that Honda as a corporate organisation is successful to a great extent. International Choices of Honda International marketing is a buzzword and business houses around the world consider it as a way to survive in the market and experience growth. Migration, investments, reduced international trade barrier and well defined legal frameworks are the major drivers of international marketing. Moreover, conducting business in the international marketing also allow companies to cater to different customer segment. With large number of benefits, it is therefore necessary for a company to choose the most suitable mode of entry in the foreign soil. In the context of this study, Honda is also enthusiastic about making its presence in foreign countries. The principal intention of Honda towards making international expansion was to showcase their expertise in motorcycle design. There are several modes by which a company can enter into a foreign market. The most common ones are exporting, licensing, joint ventures and wholly owned subsidiary. In exporting mode a company export to the target country from its home country. On the other hand licensing involves providing rights to a company of the target country to perform the business. In joint venture mode a company jointly operates with a company of the target country and wholly owned subsidiary is having a subsidiary company in the target country. Considering the characteristics of the aforementioned entry modes, it is believed that joint venture is the most appropriate entry mode for Honda. Moreover, it will also minimize the market risks of the foreign country. In terms of design, the company only relied on motorcycles with powerful engines and state of art design which was the reasons behind the initial entry failure of the company. Soon they realized that the key driver towards the success of the company lie in the lighter and efficient engines (Dlabay and Scott, 2010). Finally, the company succeeded to design a product that suits the needs of the global consumer. Moreover, the company also considered the importance of fuel efficiency. With these products the company considered USA and Europe as the most potential markets. The international strategy of the company was formulated keeping in mind about the preferences of developing nations such as India and China. In both the markets the company considered joint production and marketing venture. This strategy has allowed Honda to minimize foreign market risks and comply with the rules and regulations of the target country. In order to cite an example, the Japanese giant, Honda has tie up with other automobile companies such as General Motors, Ford, and Chrysler among others (Rugman, 2009). Honda: Success as an international Organization Honda faced numerous difficulties at the initial stages of the international expansion. However, as soon as the company understood the actual requirements of the global customer, it started to operate efficiently in most the markets. The company pursued vertical integration which allowed them to operate at the highest level of value network. In this context, Honda pursues backward integration, where its power equipments division acted as one of its biggest suppliers. Honda also faced numerous issues in the process of internationalization, but has been able to overcome most of the issues. Therefore from the above discussion it is evident that as an international organization, Honda has been extremely successful. The sales figures of the company away from its home country also reflect the same. Moreover, the company also went on to win several awards in the international arena as well (Paul, 2008). References Ahlstrom, D. and Bruton, G. D., 2009. International Management: Strategy and Culture in the Emerging World. Connecticut: Cengage Learning. Berger, A., 2011. Global Corporate Strategy - Honda Case Study. Munich: GRIN Verlag. Dlabay, L. R. and Scott, J. C., 2010. International Business. 4th ed. Connecticut: Cengage Learning. Hitt, M. A., Ireland, D. and Hoskisson, R. E., 2010. Strategic Management: Competitiveness and Globalization, Concepts. 9th ed. Connecticut: Cengage Learning. Paul, J., 2008. International Business. 4th ed. New Delhi: PHI Learning Pvt. Ltd. Rugman, A. M., 2009. The Oxford Handbook of International Business. 2nd ed. Oxford: Oxford Handbooks Online. Read More